What this Week’s Data Means:
With a slight retreat in interest rates, the week saw an advance in housing market activity, as buyers sought to find the right home. Active inventory continued shrinking, but the gap from a year ago narrowed further, pointing toward a more promising spring season. Underscoring the trend, the number of homes freshly-listed on market rose from a year ago for the second consecutive week. The gain corroborates data from our fall 2021 survey of homeowners, which indicated a growing share seeking to sell in the coming months.
At the same time, with continued inventory tightness, homes sold at a faster pace, staying on the market 13 fewer days than the same week in 2021. In turn, median listing prices accelerated, rising 14.0% higher than a year ago, a period which was marked by strong price appreciation. Rising mortgage rates mean that home buyers will contend with higher mortgage payments. In addition, rising home prices combined with limited inventory is resulting in an affordability double-trouble, with fewer homes affordable to buyers based on their income level.
The median listing price grew by 14.0% over last year.
Median listing prices are re-accelerating following a fall period marked by steady 8.5% – 9.0% growth. Building on December’s rebound into the double-digits, the median listing price continued rising in the first two months of 2022, picking up speed toward the end of February. As mortgage rates surged almost 80 basis points since December 2021, and are expected to continue to increase, shrinking housing affordability is claiming central place on the list of concerns for more buyers. We are seeing several markets around the country experience price declines, keeping our 2022 Housing Forecast expectation of moderating price gains on track. However, the supply-demand dynamic remains key to price movements.
New listings–a measure of sellers putting homes up for sale–were up 2.1% from last year.
We started the year with a significant shortage of new homes, which compounded the ongoing inventory challenge. In this environment, new home listings are a necessary ingredient for a healthy market, and a key indicator of future home sales. While new listings started on a somewhat weaker note and have trended below previous year levels since the beginning of 2022, the annual rate of decline has steadily improved over time and turned positive for two consecutive weeks. We may be seeing a breakthrough in housing supply, pointing to more homes for sale in the weeks ahead, as the spring season gets underway.
Active inventory is down 22.0% from a year ago.
While new listings offered more options, buyers motivated by rising interest rates kept an active transaction pace, and we still see a sizable gap in the number of homes actively for sale relative to last year. On the plus side, the gap continued to shrink, pointing toward a more promising horizon. However, as rising mortgage rates cut into buyers’ purchasing power, it will be important to keep an eye on both inventory and sales trends to evaluate if rising inventory is the result of an increasing number of sellers or decreasing number of home shoppers.
Strong buyer interest drives time on market down 13 days from last year.
Homes sold unseasonably fast this week, prodding buyers to move quickly on making successful offers, leading to homes spending 13 fewer days on the market. This market can be especially challenging for first-time buyers who may face financing hurdles or work through contingencies. At the same time, buyers may feel caught between a proverbial rock and hard place as they face surging rents, up nearly 20% from a year ago in January. This is especially true in markets in the South and Midwest where homebuyers may spend less on a monthly payment than they would renting.